California pension managers sticking with questionable bank
June 15, 2012
Representatives of the state retirement system say they are standing by JPMorgan Chase for now despite a recent $2 billion trading loss that has sparked two federal investigations and reignited calls for tougher bank oversight. [CaliforniaWatch]
Both the California State Teachers Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) have no immediate plans to stop investing with the bank over its recent trading woes. That controversy swirled in Washington on Wednesday, with the Senate Banking Committee grilling JPMorgan Chase CEO Jamie Dimon, California Watch said.
JPMorgan, an international banking conglomerate and one of the four biggest banks in the United States, has been reeling since disclosures in April that its London-based investment office lost at least $2 billion over risky trades of exotic financial instruments.
The SEC, FBI, and Commodity’s Future Trading Commission are investigating whether the bank withheld critical information about the trades from investors.
Brad Pacheco, spokesman for the state employee retirement system, told California Watch no pension fund money was directly impacted by the JPMorgan trades now under investigation.
“We don’t have any exposure to the type of synthetic credit securities (JPMorgan) was trading,” Pacheco wrote in an email to California Watch. “We are monitoring the issues related to the company but I have nothing further at the moment.”
The commitment from the California pension funds represent the bank’s biggest bloc of pension fund stockholders. In late April, CalSTRs, which has invested in JPMorgan since 1973, owned about 12.2 million shares in JPMorgan stock, worth $522 million. CalPERS owned more than 12.4 million shares, with a total value of $565 million, officials told California Watch.